【Wen/Observer Network Pan Yuchen Editor/Gao Xin】The birthplace of the automotive industry - Europe - is at an unprecedented crossroads.

According to Spain's "Razon", just a few days ago on December 11, Spanish Prime Minister Sanchez wrote to European Commission President von der Leyen, urging the maintenance of the EU's ban on selling internal combustion engine vehicles starting from 2035, which almost goes against the opinions of most EU car-producing countries and all European car manufacturers.

The "Razon" report states that Sanchez's move comes as the EU administrative body plans to submit a proposal to relax previous carbon emission policies on the 16th; in contrast to the proposal's stance, this move benefits the sales of Chinese cars in the European market because China has already taken the lead in the process of electric vehicle development compared to the European industry.

Industry insiders believe that as a new industrial country in Europe, Spain aims to achieve a "corner-cutting" by engaging in long-term industry cooperation with industry leaders, even seeking to challenge the dominant positions of traditional European industrial powers like Germany and France. In this context, the "friendship match" consensus among European car companies over the past few decades may gradually disintegrate: after 2026, the "elimination match" of the European automotive industry may accelerate.

Corner-cutting: Opportunity for New Players?

Just before Sanchez sent his letter to the EU, the Spanish government released the "Spain Automotive 2030 Plan", which plans to invest 400 million euros (approximately 3.3 billion yuan) by 2026 to provide direct subsidies for the purchase of electric vehicles, and invest 300 million euros (approximately 2.5 billion yuan) to build more charging stations.

In addition, Spain will also add 580 million euros in funding to existing incentives for electric vehicle and battery production next year to achieve the goal of 95% of the models sold in the country being electric vehicles by 2035. Sanchez also stated that the new plan aims to make electric vehicles affordable for the working class.

Thanks to lower labor costs, Spain became the second-largest automotive production base in Europe as early as the early 21st century. With the acceleration of the transformation of the automotive industry towards electrification and intelligence, the Chinese electric vehicle industry, which leads in the supply chain, is increasingly favored by European consumers, giving emerging industrial countries like Spain the opportunity to "corner-cut".

Despite being subjected to a maximum tariff of 35.3% at the end of last year, data from market analysis firm Dataforce shows that Chinese automakers' sales in the EU, UK, and European Free Trade Association countries are expected to exceed 700,000 units by the end of this year, far exceeding the 408,000 units in 2024.

According to Spain's "El Mundo", the market share of Chinese brands in Spain has approached 10%, and this proportion has even doubled among private customers. According to data from the Spanish Automobile Dealers Association (Faconauto), BYD sold 22,300 vehicles in Spain in the first 11 months of this year, an increase of 452%; while Leap Motor, held by Stellantis, sold 2,533 units in Spain during the same period, an increase of more than 30 times.

Electric vehicles produced by Chery and Ebro in Spain Visual China

Due to the good relations between China and Spain, Spain continues to encourage Chinese enterprises to invest and establish factories in Spain, and Chinese enterprises are actively making arrangements in Spain. In November 2024, Chery and the Spanish local company Ebro formed a joint venture to start producing electric vehicles at the factory in Barcelona; the battery factory jointly built by CATL and Stellantis Group in Spain was officially laid foundation in November this year; BYD is also reported to be considering building its third European整车 factory in Spain.

Earlier, another EU country Hungary has been making every effort to attract investment from the Chinese automotive industry. In recent years, BYD has built electric commercial vehicle factories, electric passenger car factories, and European headquarters and R&D centers in Hungary; battery manufacturers such as CATL, EVE Energy, and Evergrande have also established production bases in Hungary to empower the local automotive industry in Europe.

Now, behind the ambitious electrification plans of countries such as Spain and Hungary, the Chinese automotive industry chain has become a backbone force. According to the South China Morning Post, the efforts of emerging automotive industrial countries such as Spain to attract Chinese investment reflect the intensifying competition in the European automotive industry.

Elimination Match: The Eve of the New and Old Exchange?

At the same time, traditional European automotive industrial countries led by Germany and France are facing severe shocks from the electrification and intelligent transformation of the automotive industry, as well as increased market competition pressure. In the first half of this year, the net profits of the three major German automakers Volkswagen, BMW, and Mercedes-Benz all declined by 30% or more compared to the same period last year; Stellantis Group turned from profit to loss compared to the same period last year. Entering the third quarter, Volkswagen suffered its first quarterly loss in five years, triggering a series of chain reactions including layoffs and plant closures.

It is worth noting that these carmakers generally attribute their performance decline to a decrease in car deliveries due to intensified competition, as well as additional economic burdens caused by new tariffs. Under the influence of multiple factors, the current European automotive industry shows significant contradictions and vulnerabilities internally.

The EU had set an ambitious target of reducing the average carbon emissions of new cars by 15% compared to 2020-2024 and achieving zero emissions by 2035. However, the mainstream European car manufacturers and the European Automobile Manufacturers Association (ACEA) have publicly warned that the entire industry could face high fines, forcing car manufacturers to significantly reduce production and close factories, further worsening their economic situation.

Moreover, with the rise of the Trump administration, the US high-tariff policy has become a barrier for European automakers. This forces European companies to invest more on a large scale in the US to gain exemptions, further diverting resources originally applied to transformation.

On the other hand, as a global leader in the electric vehicle industry, Chinese cars are still thriving in the European market despite overcoming tariff pressures. Facing the cost-effective and powerful Chinese models, the competitiveness and market influence of traditional European car brands are gradually declining.

Volkswagen Zwickau factory Visual China

Under this context, countries like Spain are actively embracing the Chinese electric vehicle industry chain, disrupting the traditional production model of the European automotive industry. According to "Razon", the European Commission will release a proposal on the 16th, considering postponing the original 2035 implementation of the ban on internal combustion engine vehicle production until 2040. However, Sanchez opposed in his letter, stating that the new proposal would reduce demand for electric vehicles, thus affecting the future competitiveness of the European automotive and parts industries, and increasing the possibility of factory closures and job losses.

Additionally, according to a report by the British Financial Times last week, the EU is considering a "Made in Europe" plan, which would require European companies to ensure that up to 70% of components in products such as cars are produced locally. This measure is obviously contradictory to the Pedro government's goal of making electric vehicles affordable for the working class, and also conflicts with Spain's goal of attracting investment from the Chinese electric vehicle industry chain.

Clearly, under the pressure of internal transformation, market competition, and external tariff barriers, the European domestic automotive companies are approaching the elimination match.

"China Content": The Decisive Factor for the Future of the European Automotive Industry?

For the current European automotive industry, how to find survival paths while finding long-term development paths tests the wisdom of each European carmaker's management.

According to industry insiders, the competition in the European automotive industry after 2026 may present the following characteristics:

Firstly, under competitive pressure, affordable models of European car brands will be concentrated in the market, and price wars may take place in the European market. Volkswagen has announced that it will launch three electric vehicles developed on the same platform through its Volkswagen, Skoda, and Cupra brands next year, with a starting price of about 25,000 euros, and plans to launch an entry-level model with a starting price as low as 20,000 euros in 2027, further lowering the price threshold; while Renault and Ford's jointly developed electric vehicle will target the sub-20,000 euro market.

Secondly, with the possible relaxation of EU carbon emission policies, some European car manufacturers may re-embrace hybrid vehicles or even internal combustion engine vehicles to cope with real challenges and maintain commercial profits;

Thirdly, to spread risks and reduce costs, European car manufacturers will engage in intensive "alliances" in the domestic market to prepare strategic chips for the upcoming elimination match.

Fiat 500 hybrid production line in Turin, Italy Visual China

On December 9, Renault and Ford announced their collaboration to develop two small electric vehicles, aiming to reduce development and manufacturing costs by sharing platforms and research and development resources, planning to launch them in the European market in 2028 to offset the advantages of Chinese competitors in the small electric vehicle market.

Additionally, due to relative lag in the fields of electrification and intelligentization, many European companies have started to rapidly acquire mature solutions validated by the market through joint ventures, investments, and technology licensing, deeply integrating Chinese companies' technologies, supply chains, and even business models into their own systems.

For example, Stellantis Group invested in Chinese new energy vehicle manufacturer Leap Motor and established a joint venture, obtaining exclusive authorization for Leap Motor's electric vehicle technology platform, and using the joint venture Leap International to achieve local production, sales, and overseas expansion;

Renault, through cooperation with Geely Holding Group, shares hybrid power technology and supply chain resources, promoting products produced in South Korea and Brazil; and launched the "Leap 100" plan, drawing on the development model of Chinese companies, significantly shortening product development cycles.

Volkswagen cooperates with XPeng Motors and Horizon Robotics to jointly develop electric vehicle models and auxiliary driving technologies for the Chinese market, and the results of this technological achievements are also expected to benefit the European domestic market.

Today, these collaborations between European car companies and Chinese companies have gone beyond simple procurement, entering the level of strategic coordination. While consolidating the product competitiveness of European car companies in the era of electrification and intelligence, they also provide a remedy for cost reduction, efficiency improvement, and improved business conditions. Chinese partners are no longer merely suppliers but indispensable "accelerators" for European car companies in the upcoming elimination match. In the future, the "China content" of European car companies may become the decisive factor in verifying their market competitiveness.

Despite this, the European automotive industry faces an extremely complex "tightrope walking" game externally while internal competition intensifies. Facing the severe situation of the elimination match, how to maintain the local ecosystem while embracing the innovation of the Chinese supply chain? How to maintain strategic autonomy when facing U.S. coercion? This extreme balance between cooperation and competition, openness and protection, ideals and reality will determine which European car companies can navigate through the cycle and continue to occupy a place in the new global automotive landscape.

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Original: toutiao.com/article/7584038595946725934/

Statement: This article represents the personal views of the author.